Zurich Falsely Claimed that it was Registered with the CFTC and a Member of the National Futures Association

Washington, D.C. — The Commodity Futures Trading Commission (CFTC) announced today the filing of an enforcement action against Zurich Futures & Options, Inc. (Zurich) and Michele LaBruce,both of Hollywood, Florida, charging them with fraudulent solicitation of customers, using false claims of CFTC registration and membership with the National Futures Association (NFA), and with operating as an unregistered Introducing Broker (IB).

The Fraud Targeted Canadian and Other Non-U.S. Citizens

The CFTC complaint, filed in the U.S. District Court, Southern District of Florida on February 24, 2009, alleges that, from approximately April 2006 through approximately March 2007, defendants fraudulently solicited approximately $1.45 million from at least 60 customers who opened trading accounts to trade commodity options. As alleged, defendants targeted Canadian and other non-U.S. citizens as customers and falsely claimed that Zurich was a member of the NFA and registered with the CFTC as an IB. Through the Zurich website, solicitation materials, and the activities of their brokers, defendants created a false impression that Zurich was a successful and well-established international IB with an experienced investment team and offices in Zurich, Switzerland and Toronto, Canada.

In fact, as alleged in the CTFC complaint, Zurich was nothing more than a sham operation that operated out of the Hollywood, Florida area. Zurich rented mail drop offices in Switzerland and Canada through which the defendants re-routed customer calls to Southern Florida and funneled mailings of solicitation materials and account opening documents. According to the CFTC complaint, in slightly less than one year of operation, Zurich collected more than $1.3 million in commissions and fees, while its customers lost almost all their money trading with Zurich. Zurich then abruptly shut down its operations with no notice to its customers and provided no way for those customers to get in touch with Zurich or its brokers.

The CFTC complaint charges LaBruce directly with fraud and with liability for Zurich’s fraud. In addition, the CFTC alleges that by soliciting customers to open trading accounts at an FCM to trade on-exchange commodity options, Zurich was required to be registered as an IB and LaBruce was required to be registered as an Associated Person of Zurich.

LaBruce is the wife of Adam Leon. In September 2006, the CFTC obtained a judgment against Leon as part of a case brought against Presidential FX for fraudulent solicitation of customers in connection with foreign currency option contracts. Under that judgment, Leon was ordered to pay $1.5 million in restitution and a $1 million civil monetary penalty, and was permanently enjoined from engaging in any commodity-related activity. (See CFTC News Release 5234-06, September 27, 2006.)

The CFTC gratefully acknowledges the assistance of the Belize Financial Intelligence Unit, the Ontario Securities Commission, the Swiss Federal Market Supervisory Authority, and the Israel Securities Authority in investigating this matter.

The following CFTC Division of Enforcement staff members are responsible for this case: Alan I. Edelman, James H. Holl, III, Kara Mucha, Michelle Bougas, Gretchen L. Lowe, and Vincent McGonagle.